Have you checked out the price of turkey lately? You can thank Al Gore. Actually you can thank Gore and the Midwest ethanol subsidy lobby consisting of Republican and Democrat lawmakers alike. It’s the classic lose-lose scenario from the government meddling with the marketplace believing they know better than the private sector. Not only are you footing the bill for ethanol subsidies but you are paying more for food because those subsidies are being used to give farmers better prices than the market allows. Farmers aren’t idiots. If Uncle Sam is willing to dole out bushels of more money at a set price for their corn crop why not go for it? | ||||||||||||||||||||||||||||||
By Kris Bevill | November 03, 2011
It was déjà vu all over again on Nov. 2 as representatives of the ethanol industry were forced to watch a House of Representatives Energy and Environment Subcommittee hearing on motor fuel standards from the sidelines. Earlier this year, the subcommittee held a hearing to discuss the scientific testing of E15, but failed to invite anyone from the ethanol industry to testify. On Nov. 2, the subcommittee again convened a panel to address the “Conflicts and Unintended Consequences of Motor Fuel Standards,” but declined to include any ethanol industry representatives. The petroleum industry was well-represented, however, as were several other witnesses who delivered remarks opposing the implementation of E15 and the RFS.
Committee Chairman Andy Harris, R-Md., opened the hearing by making clear his disapproval of the U.S. EPA and government policies to support biofuels and renewable energy. “Whether through government hand-outs, as in the case of Solyndra, or heavy-handed mandates as in the case of the RFS [renewable fuel standard], the picking of energy winners and losers by government fiat is an exercise in futility destined to fail miserably,” he said. He asserted that the EPA “continuously fails to do its homework” and said its approval of E15 based on one U.S. DOE study is an example of that failure.
Harris’s comments were echoed by Brendan Williams, senior director of advocacy for the National Petrochemical and Refiners Association. He testified that the E15 waiver approval puts refiners and consumers at risk for potential misfueling issues and urged Congress to repeal the EPA’s partial waiver for E15. Williams further stated that the concerns related to E15 provide an example of even greater issues associated with the RFS in general. “If the existing RFS program is carried out without changes, it will create great market and economic uncertainty, which will in turn threaten additional refining investment and job growth and harm consumers,” he stated. “Given the aggressive schedule of the mandate and the limits of what fuel and vehicle infrastructure can handle, our nation will soon face a practical limit [as to the amount of biofuels] that can be pushed into the fuel supply without causing significant consumer disruption.” He added that E85 could help to alleviate pressure on the blendwall, but said it has yet to become widely accepted by consumers and does not appear to be a viable compliance option for the RFS. “No small engines are designed for E85 and only a small fraction of the fleet of cars is designed for the fuel,” he stated. “E85 requires an expensive investment at retail stations because of the corrosive nature of ethanol. This issue is yet another in a panoply of problems associated with the current structure of the RFS.”
Margo Oge, the EPA’s Office of Transportation and Air Quality director, came to the defense of the RFS in her testimony, stating that when the policy is fully implemented it could displace 13.6 billion gallons of gasoline and diesel in 2022. “We also estimate that the fully implemented program would decrease oil import expenditures by $41.5 billion, result in additional energy security benefits of $2.6 billion, and reduce GHG [greenhouse gas] emissions by an average annualized rate of 138 million metric tons of CO2 equivalent per year,” she stated.
Oge also noted that the EPA has not registered E15 as a new gasoline under the Clean Air Act, so it cannot yet be legally sold into the marketplace. According to her testimony, ethanol industry representatives submitted emissions and health effects information related to E15 earlier this year, to be used in completing registration applications, and they are now in the process of developing additional information for that purpose. “Once complete, the information will be helpful to fuel producers in submitting registration applications for E15,” she stated. “Until such time as EPA approves a complete registration application, E15 may not be lawfully sold for use in model year 2001 and newer light-duty motor vehicles.”
The recently released National Academy of Sciences report, “Renewable Fuel Standard: Potential Economic and Environmental Effects of U.S. Biofuel Policy,” was referenced frequently during the hearing as proof of the policy’s ineffectiveness. However, Ingrid Burke, co-chair of the committee who authored the report, offered extensive written testimony on the conclusions reached in the report, often stating that the end results were inconclusive. The effect of 36 billion gallons of biofuels on GHG emissions compared to the energy-equivalent amount of petroleum is “uncertain,” she stated. Also, the effects of increased biofuel production on soil and biodiversity are likely to vary depending upon which practices and feedstock are used. “Thus, the effects of achieving RFS2 on those two environmental variables cannot be readily quantified or qualified largely because of the uncertainty of the future,” she stated. Nonetheless, the committee majority appeared only to be interested in one of the items mentioned in Burke’s testimony, releasing a statement that repeated a comment made by her suggesting that increased ethanol use could have a negative impact on air quality due to higher concentrations of certain pollutants.
Meanwhile, Oge pointed out during the question and answer session of the hearing that ethanol plays a vital role in the transportation fuels sector and cannot be completely omitted from the supply. “Ethanol improves the octane of gasoline, so it’s a very important product in gasoline,” she said. “Ethanol reduces the amount of benzene in aromatics so you end up with somewhat less toxic substances in the gasoline make-up.”
Ethanol groups spoke out in advance of the hearing in an attempt to make their voices heard despite being left off of the witness list. Brian Jennings, executive vice president of the American Coalition for Ethanol, submitted a letter to committee leaders expressing his disappointment in the lop-sided hearing and pointing out the importance of ethanol in reducing
"Pete" Landry..............comments welcome............at way2gopete@yahoo.com
Updated November 6, 2011, 07:00 PM
Matthew Kotchen is a professor of environmental economics and policy at Yale University.
New and efficient technologies for extracting oil and natural gas are increasing the supply of both fuels from North America. But the consequences will be different for oil than for natural gas. Oil is traded in a highly integrated world market, and the relatively small increases in North American oil will have virtually no effect on prices. The result is that our demand for oil will remain unaffected by the change in supply, though we may take comfort in knowing that more of the oil we use is produced closer to home.
Natural gas is a different story. The markets are far less integrated, so the increase in domestic supply will lower prices and increase demand. We will have more households switching from oil to natural gas for heating, and we will have relatively more electricity generated with natural gas than with coal. The lower prices will be a good thing for consumers paying their utility bills, and there will be health and environmental benefits because natural gas is a relatively clean fuel.
But more and cheaper natural gas does not help our prospects for bolstering renewable sources of energy, including solar, wind and biomass. History has shown repeatedly that nothing is worse for renewable energy — and the policies that support it — than cheap and abundant conventional energy. Without the urgency of high fuel prices, the United States has never sustained meaningful private and public investment in the technological innovation and deployment of renewables.
We should do our best to make sure this time is different. There has been meaningful investment — both public and private — in recent years, and despite our current economic challenges, it would be a mistake to turn back these efforts. Also, we must not throw out the baby with the bath water in response to the Solyndra bankruptcy. Instead, it is critical that we find ways to do better with the right economic incentives.
The expansion of oil and natural gas supplies in North America changes little about our long-term energy challenges. Beyond the growing demand for energy worldwide, climate change is an increasingly important and closely related problem. Conventional sources of energy generate greenhouse-gas emissions that cause global warming. While the burning of natural gas generates fewer emissions than oil and coal, its emissions are nevertheless substantial — and extraction using hydraulic fracturing raises other environmental concerns.
Renewable sources of energy provide a leading alternative, and we need a sustained commitment to improving these technologies with the aim of making them cost competitive. Indeed, it should be concerning that China is doing exactly this while we in the U.S. watch our former leadership in renewable energy continue to erode.
Higher food prices are leading more than a third of U.S. consumers to cut back on holiday spending, according to a new survey by Americas Research Group for Reuters.
A total of 28.4% of the 1,000 people surveyed by Americas Research Group said that rising food costs would cause them to cut back on their Christmas shopping somewhat. Another 7.2% said they would most definitely cut back.
According to the American Meat Institute (AMI), approximately 40% of the U.S. corn crop is now devoted to ethanol production. This increase in corn demand has driven corn prices to record levels, putting tremendous pressure on the livestock and poultry industries that traditionally have been the major consumers of corn as feed.
In fact, corn prices have roughly tripled since the government in 2006 mandated that ethanol be blended into gasoline, and the Consumer Price Index for meat and poultry products has risen steadily with it.
AMI has advocated for a more balanced energy policy that would include federal energy policies that transcend corn-based ethanol and don’t pit food, feed and fuel needs against each other.
To sign a petition supporting a balanced energy policy, go to http://www.cornforfoodnotfuel.com/.
By Holly Jessen | October 21, 2011
Just more than a week after announcing the formation of the Coalition for E85 the group said Oct. 21 that it had a new member. The Petroleum Marketers Association of America, which represents 8,000 independent petroleum marketers nationwide, will help spread the message that E85 is a true alternative fuel and should receive a 50-cent per gallon tax credit as part of the Alternative Fuel Credit. “If we don’t enable E85 to compete with gasoline, we could see the entire flex-fuel industry disappear,” said Dan Gilligan, PMAA president. “Our members, automakers, and 9 million American drivers have invested in E85 infrastructure and flex-fuel vehicles. With E85 so close to self-sustainability, these investments must be protected.”
The group’s success depends on how quickly it can activate a grassroots network of stakeholders, said Jeff Trinca, vice president Van Scoyoc Associates, which has been hired as a lobbyist for the coalition. So far, the coalition’s members include Propel Fuels, Protec, Clean Fuels Development Coalition, Pearson Fuels, AMERigreen, Petro Serve USA, multiple ethanol industry associations, pump and tank companies and individual E85 retailers. The addition of PMAA is something to celebrate. “PMAA brings a motivated group of constituents to the table,” Trinca said. “We are very optimistic that once policymakers understand the difference between ethanol as an additive and E85–an alternative fuel–we can win this issue. Helping local folks deliver that message is what the E85 Coalition is all about.”
Current supplies of E85 are derived from first-generation ethanol, however, as the industry moves forward it can be produced from non-food sources such as agricultural and household waste, algae and biomass. “Without the E85 system, the federal government’s investment in the development and commercialization of next-generation biofuels may be wasted,” according to the coalition press release.
There are more than 9 million flex-fuel vehicles on the road today. The coalition says that, without the 50 cent Alternative Tax Credit and with the Volumetric Ethanol Excise Tax Credit expiring at the end of 2011, FFV drivers will pay as much as 38 cents more per gallon for E85. The group predicts that small businesses that have invested more than $100 million in E85 infrastructure will have to close their pumps.
PMAA is a federation of 48 state and regional trade associations. A petroleum marketer is defined as wholesale or retail operations that operate in all or some of businesses that own “gasoline stations, convenience stores, heating oil businesses, truck stops, lubricant warehouses, petroleum trucking companies and bulk storage facilities.” PMAA marketers supply fuels to 40,000 independent retail fuel outlets and own a total of 60,000 outlets.
ePURE, the association of European renewable ethanol producers has requested the European Commission to act against unfair imports of fuel ethanol from the United States.
The government of the United States has encouraged the production and use of ethanol as fuel without interruption for the last twenty years, notably through the provision of generous subsidies benefitting ethanol producers directly or indirectly through the obligation to blend ethanol with gasoline. The federal excise tax credit and the federal income tax credit represent only the most visible portion of a comprehensive subsidisation policy at all levels of government in the United States. As a result of this policy, the United States are, by far, the largest producer of fuel ethanol in the world.
The association of European renewable ethanol producers, ePURE, describes this policy as “legitimate”, but with a caveat: as long as it does not prejudice the development of ethanol for fuel use in other countries.
But US operators, which are faced with a domestic ethanol market that is nearing saturation, have chosen to allocate a growing share of their production to exports towards the European Union. From 2008 to 2010, US imports of fuel ethanol in Europe have surged by more than 500%. In 2011, these imports are expected to be twice as high as in 2010. This impressive trend is the direct result of US federal and sub federal subsidies, which allow US operators to adopt aggressive pricing practices on the European market.
According to ePURE; these very low prices have “a direct and negative impact on the EU industry,” especially as the European ethanol industry is very small in comparison to the US industry and a lot of ethanol producers are still in a take-off phase.
“Massive and sudden imports of US ethanol, combined with unfairly low prices over the last few years, have seriously damaged the economic situation of European producers” explains Rob Vierhout, Secretary General of ePURE. This situation is all the more critical as the market prospect for fuel ethanol in Europe is very bright, with a rapidly increasing consumption of renewable fuel in all EU countries.
“The unfair competition of US imports is simply depriving the EU industry from the benefit of this positive evolution on its own domestic market” Vierhout says.
ePURE has requested the European Commission to investigate US unfair trade practices and their impact on the EU industry. ePURE is confident that the Commission's investigation will confirm that these practices are causing a serious prejudice to European producers and will clearly establish the need to impose dissuasive du ties on US imports of fuel ethanol in order to restore fair conditions of competition as early as possible.
In the meantime, ePURE has also requested the European Commission to impose a registration of US imports so that du ties are imposed retroactively to take account of possible manipulation during the investigation period.
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"Pete" Landry........comments welcome at ..................way2gopete@yahoo.com
